If a LIFO Liquidation Occurs During a Period of Rising

question 26

Multiple Choice

If a LIFO liquidation occurs during a period of rising prices, which of the following statements about the effects on a firm's financial statements, all other things equal, is generally true?
I. Cost of goods sold increases.
II. Gross profit margin increases.
III. Taxes decrease.
IV. Net income increases.

• A) I only
• B) II only
• C) I and III only
• D) II and IV only

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